McClintock Inc. had the following information available from its 2011 balance sheet and income statement: Insurance expense $15,000 Prepaid insurance – beginning 30,000 Prepaid insurance – ending 25,000 What amount would be reported as cash outflows for insurance on the statement of cash flows for 2011 using the direct method Solution Insurance Expense 15000 Add: Prepaid Insurance ending 25000 Less: Prepaid Insurance beginning -30000 Cash Outflow for insurance 10000.

1. McClintock Inc. had the following information available from its 2011 balance sheet and income
statement: Insurance expense $15,000 Prepaid insurance – beginning 30,000 Prepaid insurance –
ending 25,000 What amount would be reported as cash outflows for insurance on the statement
of cash flows for 2011 using the direct method
Solution
Insurance Expense 15000 Add: Prepaid Insurance ending 25000 Less: Prepaid Insurance
beginning -30000 Cash Outflow for insurance 10000